The debate over the Merchant Marine Act of 1920 (Jones Act) has been revived as devastating hurricanes stormed through the Caribbean and public figures like Sen. John McCain (R-Ariz.) have introduced legislation for its partial or total repeal.
The United States Congress should repeal the outdated Jones Act of 1920 because it is hindering economic development and free markets in Puerto Rico, Florida, Hawaii, and Alaska, while promoting a monopoly in national trade.
The United States Merchant Marine and its political lobby benefit from the Jones Act because its means that they do not have to compete with the lower costs and more efficient services offered by other shipping giants, such as Maersk.
The fact is that the Jones Act is both a regulatory burden and huge subsidy that keeps the shipping industry in the United States from becoming truly competitive because they already have a captive domestic market.
Theoretically, given its strategic regional position, Puerto Rico should have access to imported goods at a more favorable rate than some parts of the mainland United States because of the numerous trade routes that traverse the Caribbean.
However, it is estimated that consumers in Puerto Rico pay approximately twice what other Caribbean islands pay for imports due to the restrictions imposed by the Jones Act.
The Jones Act and the industry that it has protected for almost a century seem to be one of the few sectors of the national economy that is not willing to deregulate.
The permanence of the Jones Act will hinder Puerto Rico’s competitiveness as the island seeks to reshape its economic model.
Nevertheless, should congressional Democrats and Republicans do the right thing and come together on this issue, they can dismantle the antiquated Jones Act both because it will help Puerto Rico and because it is a free-market, monopoly-busting approach to maritime shipping.